Diligent Talknormalists will recall that, just over a year ago, I introduced the Joy Index to measure the mood of the English-speaking world. The index was compiled by dividing the number of stories in the news media mentioning “joy” by the number mentioning “gloom”. I exclude sports reports, which are fun but produce a transient excess of both; and obituaries, where our joy or gloom at someone’s death would probably owe more to that person than the state of the world.
When the line goes up, we’re becoming more joyful. When if goes down, we’re becoming gloomier. Actually, the index is dominated by gloominess – the amount of joy in our lives, or at least in the newspapers, is remarkably stable.
In the US, the average of the Joy Index was at an unsurprising historical low, just above 2.0, during 2008 – the same level as it reached in the week of the 9/11 attack. In the first week of August 2011 it was all the way down to 1.62.
So, first the good news! In 2012 the US has been, until recently, much less gloomy if we take a monthly average: the TN Joy Index has kept well above 2.0 at all times. Of course, October was a gloomy month. Hurricanes are like that. But, compared to the darkest days of 2008, there’s between two and four times less gloominess in the news:
Meanwhile, in Europe, the English-language press isn’t so optimistic. The index shows there’s about three times as much gloom for each unit of joy as there is in the US. I blame austerity, or maybe socialism:
It is, in the words of the nonsense phrase, a global world. It’s possible that Americans just don’t like to write about gloomy things as much, though that would be a recent phenomenon: last time I calculated the index, there wasn’t this US-Europe split. Most of the time, we are all in it together. When you take the indices in November 2011 as a starting point, the ratio of joy-to-gloom in Europe and the US rises and falls in just the same way (until Sandy in October):
We’re on the same emotional rollercoaster – it’s just that Europeans really, really want to get off. This could be because, more often, the ultra-gloomy news has been happening in Europe. When the index dipped, the three most important topics in gloomy stories were the Euro zone, consumer confidence and Central Banks in Europe, and Euro zone, consumer confidence and monetary policy in the US.
When the index went up, the gloom story headlines showed no strong pattern. Clearly it is better to worry about many things, some of the time, than one thing, all the time.
Think of the upswings in the Joy Index as having a hangover while it is raining outside, your car needs a new gearbox, and a small child has been singing really annoying made-up songs for three hours. Never mind! In the Joy Index downswings, your life would be exactly the same – except the bank repossesses your house as well.
One final point, for those of you who read blogs while wondering, “this is all very well, but what do the markets think?” Since November 2010 the US Joy Index has been a statistically significant predictor of the size of the month-end change in the Dow’s moving average. As I said last time: sell gloom, buy joy.